Fast food serves up fast growth in Tampa, Orlando

Tampa has long been a popular market for companies in the highly competitive quick-service and fast-casual restaurant industries. Checkers & Rally’s is headquartered here, and recently Captain D’s and The Simple Greek entered the market for the first time.

QSR magazine released its annual list of the top development markets for quick-service restaurants, known as QSR, in 2017 and, unsurprisingly, Tampa (which, for statistical purposes, also includes St. Petersburg and Sarasota) was identified as a top 10 medium city for market growth.

Tampa’s rapid population growth is a major factor driving QSR and fast-casual chains to target the region for expansion. According to the trade magazine’s data, Tampa’s population is projected to reach 4,837,404 by 2021 – a 6.7 percent increase over 2016. The magazine is also forecasting an 11 percent increase in Tampa-area QSR traffic between 2016 and 2021.

“We are in growth mode now, and for us, when we were looking at locations, Tampa rose to the top,” said Bob Ritter, vice president of Memphis, Tenn.-based Lennys Subs. “The blue collar/white collar ratios are very good, average income is right in the sweet spot, the population is growing. And let’s face it, baby boomers are going south. All these people are coming from somewhere and the full-time population is greater and not as transient.”

Tampa already has 89.51 QSRs per 100,000 people, according to the magazine’s research, but that level of market penetration isn’t a deterrent. Quite the opposite, actually.

“Tampa is a major target for us,” said Tom Monaghan, chief development officer at Philadelphia-based Philly Pretzel Factory. “We go to some markets where there just isn’t much retail space available. But in Tampa, there’s a lot of new construction going on. We are also seeing the influx of a lot of companies moving their corporate headquarters here, as well as a lot of small business growth.”

Lennys has two restaurants in Tampa already, as well as one in Bartow, Fla., but is eager to add more. Ritter said the company is also looking at Orlando and Naples. “We’ve got a couple of good leads we are working from the Tampa Bay Franchise Expo [in February],” he said. “Ideally we’d like to see them open within six months.”

Philly Pretzel Factory is being even more aggressive. Monaghan says the company would like to see 30-35 standalone restaurants open within the next two years. “Then we’ll fill out with nontraditional locations inside Wal-Marts, sporting arenas, SeaWorld, places like that,” he explained. “We’re interviewing franchise candidates right now. It’s a highly selective process and we want to make sure we get the right people, so probably sometime in late fall you’ll see the first franchise open up.”

QSR magazine has Tampa at No. 2 in its development market rankings, second only to Fresno-Visalia, Calif., and just ahead of Milwaukee. The Orlando (which includes Daytona and Melbourne) and Miami-Fort Lauderdale metros also appear in the top 10, while West Palm Beach-Fort Pierce is ranked No. 13.

Also poised for significant growth in the Tampa region is one of the most venerable and iconic QSR brands – Dairy Queen – and it’s doing it in a way that will give back to the community. The local franchise rights are held by Lakeview Center, a Pensacola, Fla.-based nonprofit organization that provides aid to people suffering from mental illnesses, addiction disorders and disabilities, as well as children who have been abused or neglected. Tra Williams, a 20-year veteran of the franchise industry who was previously president of a group of Planet Smooth locations, heads up Lakeview’s franchising efforts.

“A few years ago, in looking at the budget chaos in Tallahassee and Washington, D.C., we decided it was prudent to start earning our own money and not rely so much on state and federal funding,” Williams said. “I was fortunate enough to be brought in to head a franchise division that does franchising and real estate development for profit. It’s a for-profit, wholly owned subsidiary of a 501(c)(3) nonprofit. So 100 percent of the profits from this location and our other two locations are donated back to the parent company as a charitable donation. So, we support our mission by operating these restaurant units.

“It’s a unique structure, although the idea of nonprofits investing in for-profit businesses is not new,” he added. “You might see a church with a daycare center or something like that. What’s different about us is the scale. We’ll be dealing with dozens of units and trying to saturate the market. Then who knows where we’ll go – Charlotte, Knoxville, Nashville? Somewhere else where we have the opportunity to grow and support the mission.”

Lakeview recently opened its third Dairy Queen in the Tampa Bay area and has plans for several more, Williams said.

“Our plan was for 12 stores but only because it felt prudent not to plan beyond that. We thought it would take us five to six years to get to that number. We’re now three years in and have three stores. So we’re going to accelerate the growth in the next three years. We have another store coming this year and at least two opening in 2018. We’ll hit our 12 in the next three to four years.”

Lakeview cast an extremely wide net when it began to look for a franchise company with which to partner, Williams said, but eventually chose Dairy Queen because of cultural and philosophical similarities.

“We started by looking at all 3,000 franchises in the U.S. – literally, all 3,000,” he said. “We narrowed that list down to 80 or so that met our requirements. From there, we distilled that down to around eight or nine and started visiting them in person.

“When we visited Dairy Queen at their headquarters in Minneapolis, myself, my CEO and my CFO went, and it was so obvious how culturally consistent they were with us,” Williams continued. “They just had to be our flagship brand. Dairy Queen has a long history of philanthropic activity. They’ve partnered with Children’s Miracle Network for many years, donating millions and millions of dollars. It’s a very forward-thinking organization. We also chose DQ because there’s lots of opportunity for growth in this area. There’s not a lot of DQs down here so we have the opportunity to grow for years.”

Williams believes Tampa Bay is a prime market for the DQ brand because of, and not in spite of, its geographical limitations.

“Growth can only happen in a couple of directions,” he explained. “You can’t go west. As a result, that’s tearing down barriers out into the more rural, Norman Rockwell-esque communities to the east, and the folks who live there are the folks who love DQ. Our first unit was up on 301 in Riverview and it’s done extremely well. The community really supports us there. The second unit is up in Pasco County on Highway 54 near Land O' Lakes, Fla. That’s been a great spot for us. We really like to weave ourselves into the fabric of the community, and the Tampa region has really afforded us that opportunity.”

April 7, 2017 - 4:45pm

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